I.T.O.Wd - 4,Haldia, Purba Medinipur V. M/s Satyanarayan Bastralaya, Purba Medinipur

ITA 1717/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78394 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 22-11-2012
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Assessee Lawyers: DAVID Z CHAWNGTHU ACIT
• Section: 133A; 133(6); 147; 131; 148

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , . . . . ! ! ! ! /AND ' #!' ' #!' ' #!' ' #!' , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] !$ / I.T.A NO.1779/KOL/2012 #% &'/ ASSESSMENT YEAR: 2007-08 M/S. SATYANARAYAN BASTRALAYA VS. INCOME-TAX OFFI CER, WD-4, HALDIA (PAN:AAKFS6256L) ()* /APPELLANT ) (+,)*/ RESPONDENT ) & !$ / I.T.A NO.1717/KOL/2012 #% &'/ ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, WD-4, HALDIA VS. M/S. SATYANA RAYAN BASTRALAYA ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 25.07.2014 DATE OF PRONOUNCEMENT: 25.07.2014 FOR THE APPELLANT: N O N E FOR THE RESPONDENT: SHRI DAVID Z CHAWNGTHU, ACIT , SR. DR / ORDER PER SHRI MAHAVIR SINGH, JM : THESE CROSS APPEALS BY ASSESSEE AND REVENUE ARE AR ISING OUT OF COMMON ORDER OF CIT(A)-XXXIII, KOLKATA IN APPEAL NO. 354/CIT(A)-XXX III/ITO,WARD-4/HAL/09-10 DATED 28.09.2012. ASSESSMENT WAS FRAMED BY ITO, WARD-4, HALDIA U/S. 147/143(3) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEARS 2007-08 VIDE HIS ORDER DATED 30.12.2009. 2. FIRST WE TAKE UP ITA NO. 1717/K/2012 (REVENUES APPEAL). THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) RE STRICTING THE ADDITION AT RS.1,68,546/- AS AGAINST THE ADDITION MADE BY AO AT RS.9,94,731/- ON ACCOUNT OF UNDISCLOSED PURCHASES BY APPLYING GROSS PROFIT RATE. FOR THIS, REVENUE HAS RAISED FOLLOWING THREE GROUNDS: 1. THE LD. CIT(A) ERRED IN DETERMINING THAT RATES OF PROFIT EARNED IN NON-TAXABLE GOODS AND TAXABLE GOODS ARE SAME. 2. THE LD. CIT(A) ERRED IN STATING THAT PROCEEDING U/S. 147 IS FOR THE BENEFIT OF THE REVENUE AND HENCE FRESH CLAIM OF EXPENSES ON TRAVEL LING AMOUNTING TO RS.19,663 WAS WRONGLY NOT ALLOWED BY THE LD. CIT(A). 2 ITA NO.1779/K/2012 & 1717/K/2012 M/S. SATYANARAYAN BASTRALAY AY 07-08 3. ON THE BASIS OF THE SAME ERRONEOUS LOGIC (AS STA TED IN GROUND TWO ABOVE), THE LD. CIT(A) ERRED IN NOT ALLOWING SHOP EXPENSES TO THE T UNE OF RS.4682/-. 3. WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT A SURVEY ACTION U/S. 133A OF THE ACT WAS CARRIED OUT ON THE PREMISES OF THE ASSESSEE ON 16.09.2008. DURING THE COURSE S URVEY, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND IMPOUNDED. IN VIEW OF THESE DOCUMENTS MA RKED AS SB/124 THERE ARE CREDIT PURCHASES CLAIMED TO THE EXTENT OF RS.5,07,568/-. THE AO ISSUED NOTICE TO THE PARTIES/CREDITORS U/S 133(6) OF THE ACT BUT BREAK UP OF BALANCES IN T HE ACCOUNTS OF SUNDRY CREDITORS DOES NOT SHOW SUCH PURCHASES. THEREFORE, HE TREATED THIS AS UNDI SCLOSED CASH PURCHASE AND MADE ADDITION OF RS.5,07,568/-. THE CIT(A) AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE APPLIED NET PROFIT RATE OF 10% AND RESTRICTED THE DISALLOWANCE AT RS.5 6,391/- BY OBSERVING AS UNDER: 3.2. I HAVE CONSIDERED THE SUBMISSION MADE. A SIMP LE PERUSAL OF THE IMPOUNDED DOCUMENT, CONTENTS OF WHICH ARE AS REPRODUCED ABOVE , INDICATES THAT CERTAIN UNACCOUNTED PURCHASE OF RS. 5,07,568/- WAS MADE BY THE APPELLANT FROM SHRI SUNIL DAW AND THE CONSIDERATION FOR THE SAME REMAINED UNPAID TILL 10.04.2007 I.E. AFTER END OF THE PREVIOUS YEAR. AS PER PROVISONS OF SECTION 292C, W HERE ANY BOOKS OF ACCOUNTS OR OTHER DOCUMENTS ARE FOUND IN POSSESSION OR CONTROL OF A P ERSON IN THE COURSE OF SURVEY ACTION, IT SHALL BE PRESUMED THAT THE CONTENTS OF SUCH BOOK S/OTHER DOCUMENTS ARE TRUE. THEREFORE THE PRESUMPTION, N ABSENCE OF ANY MATERIAL TO THE CONTRARY, IS THAT WHAT IS RECORDED IN THE IMPOUNDED DOCUMENT S CORRECT. LF SO, THEN T F OLLOWS THAT THE CORRESPONDING PURCHASES WERE UNACCOUNTED, I.E. NOT RECORDED IN BO OKS AND NO CONSIDERATION WAS PAID BY THE APPELLANT TILT END OF THE PREVIOUS YEAR. THE REFORE, THE CONCLUSION OF THE ASSESSING OFFICER THAT THE PURCHASE UNDER CONSIDERATION WAS U NDISCLOSED CASH PURCHASE IS WITHOUT ANY BASIS. SINCE NO CONSIDERATION WAS PAID TILL THE END OF THE PREVIOUS YEAR, THERE IS NO QUESTION OF MAKING ANY ADDITION FOR INVESTMENT IN T HE SAID PURCHASE. HOWEVER, SINCE NO EXCESS STOCK WAS FOUND AT THE TIME OF SURVEY, IT S REASONABLE TO PRESUME THAT THE MATERIAL AT WHICH WAS PURCHASED OUT OF BOOKS WAS SO LD DURING THE YEAR ITSELF. THEREFORE THE PROFIT EARNED THEREON IS REQUIRED TO BE TAXED. THIS POINT WAS DISCUSSED WITH THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT AND HE C OULD NOT COUNTER THE SAME. THE GROSS PROFIT RATE DECLARED BY THE APPELLANT IN STATEMENT U/S 131 IS 1O% (OF SALES) WHCH IS EQUIVALENT TO 11.11% OF PURCHASE. APPLYING THE SAME RATE, GROSS PROFIT ON PURCHASE OF RS. 5,07,568/- WOULD COME TO RS. 56,391/-. THE ADDI TION IS ACCORDINGLY BEING RESTRICTED TO RS. 56,391)-. SIMILARLY, ANOTHER UNACCOUNTED PURCHASE OF RS.4,68, 689/- WAS THERE AS PER IMPOUNDED DOCUMENTS. THE CIT(A) RESTRICTED THE ADDITION AT RS .50,071/- VIDE PARA 4.2 OF HIS APPELLATE ORDER AS UNDER: 4.2. THUS, THE APPELLANT HAS NOT DISPUTED THE FACT THAT UNACCOUNTED PURCHASES AND SALES WERE MADE IN CASH. HOWEVER, THE ARGUMENT MADE IS THAT NO INVESTMENT WAS INVOLVED IN SUCH PURCHASES BECAUSE THE PURCHASES WE RE MADE IN SMALL AMOUNTS AND THE MONEY WAS CONTINUOUSLY BEING RECYCLED ON RE ALIZATION OF SALE. THERE APPEARS TO BE SOME FORCE N THE CONTENTION BECAUSE THE EVIDENCE GATHERED IN SURVEY ALSO INDICATES THAT THERE WERE TRANSACTIONS OF CASH PURCHASE AND CASH SALE ON CONTINUOUS BASIS WHICH WOULD NATURALLY RESULT IN ROTATION OF FUNDS. THEREFORE THE ACTON OF ASSESSING OFFICER IN TREATNG THE TOT AL OF PURCHASE TRANSACTIONS RECORDED IN THE IMPOUNDED DOCUMENT SB/125 AS INVEST MENT IS NOT REASONABLE. 3 ITA NO.1779/K/2012 & 1717/K/2012 M/S. SATYANARAYAN BASTRALAY AY 07-08 HOWEVER, IT IS ALSO DIFFICULT TO ACCEPT THE APPELLA NTS PROPOSITION THAT NO INVESTMENT WAS MADE IN SUCH PURCHASES AT ALL. IN FA CT, PERUSAL OF SB/125 SHOWED THAT ON 01.04.2006 ITSELF THERE WERE PURCHASES OF R S. 38,504/-. SIMILARLY ON 04.04.2006, PURCHASES OF RS. 39,057- WERE MADE. EVE N IF THE PURCHASES MADE ON 01 .04.2006 WERE PARTLY SOLD BEFORE 04.04.2006 AND SUBSEQUENT PURCHASES WERE ALL FINANCED BY THE CASH SALES, IT IS REASONABLE TO PRE SUME THAT THE APPELLANT MUST HAVE MADE INVESTMENT OF ABOUT RS. 58,032/- (PURCHASES ON 01 .04.20056 + HALF OF PURCHASES ON 04.04.2006) FROM SOURCES OTHER THAN CA SH SALES MADE DURING THAT YEAR. FURTHER, AS DISCUSSED IN PARA 3.2, SINCE NO E XCESS STOCK WAS FOUND AT THE TIME OF SURVEY, THE MATERIAL WHICH WAS PURCHASED OUT OF BOOKS MUST HAVE BEEN SOLD DURING THE YEAR ITSELF AND THE PROFIT EARNED THEREO N IS REQUIRED TO BE TAXED. APPLYING THE RATE OF 11.11% OF PURCHASE, AS DISCUSS ED IN PARA 3.2 ABOVE, GROSS PROFIT ON PURCHASE OF RS. 4,68,689/- WOULD COME TO RS. 50,071/-. THE ADDITION IS ACCORDINGLY BEING RESTRICTED TO RS. 1,10,103/- (RS. 58,032/- + 4,68,689/-). SIMILARLY, ANOTHER UNACCOUNTED PURCHASES OF RS.18,4 74/- WAS ALSO TAKEN BY CIT(A) FOR APPLICATION OF NET PROFIT RATE OF 10% VIDE PARA 6 A S UNDER: 6. GROUND NO. 5 RELATES TO PURCHASE OF RS. 18,474/ -, ALSO A PART OF ADDITION OF RS. 9,94,731/- MADE BY HIM IN RESPECT OF UNDISCLOSED PU RCHASES. THE IMPOUNDED DOCUMENT MARKED SBI/130 WAS SHOWING VARIOUS CASH PURCHASES A GGREGATING TO RS. 18,474/-. THE ASSESSING OFFICER ADDED THE SAME AMOUNT TOWARDS INVESTMENT IN UNACCOUNTED PURCHASES. THIS ADDITION IS SIMILAR TO ADDITION DIS PUTED IN GROUND NO. 2 ABOVE. THE SUBMISSIONS HAVE ALSO BEEN MADE ON SAME LNES. THE ADDITION DISPUTED IN GROUND NO. 2 HAS PARTLY BEEN CONFIRMED IN THE PRECEDING PARAGR APH. CONSIDERING THAT THE AMOUNT OF RS. 18,474/- CONSISTS OF A NUMBER OF SMALL PURCH ASES WHICH WERE MADE TOWARDS LATTER PART OF THE PREVIOUS YEAR, IN MY OPINION, AD DITION OF RS. 58,032/- FOR INVESTMENT CONFIRMED IN GROUND NO.2 WOULD COVER THESE PURCHASE S AS WELL AND NO SEPARATE ADDITION IS REQUIRED FOR INVESTMENT. HOWEVER, AS PER THE REASONING GIVEN IN PARA 3.2 ABOVE, SINCE NO EXCESS STOCK WAS FOUND AT THE TIME OF SURVEY, THE MATERIAL WHICH WAS PURCHASED OUT OF BOOKS MUST HAVE BEEN SOLD DURING T HE YEAR ITSELF AND THE PROFIT EARNED THEREON IS REQUIRED TO BE TAXED. APPLYING T HE RATE OF 11.11% OF PURCHASE, AS DISCUSSED IN PARA 3.2 ABOVE, GROSS PROFIT ON PURCHA SE OF RS.18,474/- WOULD COME TO RS.2,052. THE ADDITION IS ACCORDINGLY BEING RESTRI CTED TO RS.2,052/-. ACCORDINGLY, HE RESTRICTED THE ADDITION AT RS.1,68, 546/-. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 4. WE FIND THAT REVENUE NOW BEFORE US HAS NOT CONTE STED THAT THE SALES RECORDED ARE NOT GENUINE. THERE IS NO ADJUDICATION BY THE REVENUE TH AT THE PURCHASES ARE LYING IN THE STOCK WHICH IS NOT DISCLOSED AND THESE UNACCOUNTED PURCHASES AR E SOLD OUT. ONCE THE PURCHASES MADE ARE SOLD OUT AND NO STOCK IS LYING WITH THE ASSESSEE, O NLY GROSS PROFIT RATE OR NET PROFIT RATE CAN BE APPLIED. IN THE PRESENT CASE, CIT(A) HAS RIGHTLY R ESTRICTED THE ADDITION TO THE EXTENT OF NET PROFIT RATE. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS CONFIRMED. APPEAL OF REVENUE IS DISMISSED. 4 ITA NO.1779/K/2012 & 1717/K/2012 M/S. SATYANARAYAN BASTRALAY AY 07-08 5. COMING TO ASSESSEES APPEAL AS REGARDS TO FRESH CLAIM OF EXPENSES ON ACCOUNT OF TRAVELLING AMOUNTING TO RS.19,663/- AND SHOP EXPENS ES TO THE EXTENT OF RS.4,682/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NOS. 2 AND 3: 2. THE LD. CIT(A) ERRED IN STATING THAT PROCEEDING U/S. 147 IS FOR THE BENEFIT OF THE REVENUE AND HENCE FRESH CLAIM OF EXPENSES ON TRAVEL LING AMOUNTING TO RS.19,663/- WAS WRONGLY NOT ALLOWED BY THE LD. CIT(A). 3. ON THE BASIS OF THE SAME ERRONEOUS LOGIC (AS ST ATED IN GROUND TWO ABOVE), THE LD. CIT(A) ERRED IN NOT ALLOWING SHOP EXPENSES TO THE T UNE OF RS.4,682/-. 6. WE FIND THAT THE CIT(A) HAS NOT ENTERTAINED THE GROUNDS RAISED BEFORE HIM FOR THE FIRST TIME OR CLAIM MADE BEFORE THE AO FOR THE FIRST TIME AND THAT ALSO IN RESPONSE TO RETURN FILED U/S. 148 OF THE ACT. THE CIT(A) REJECTED THE CLAIM OF T HE ASSESSEE BY OBSERVING IN PARA 11.1 AS UNDER: 11.1. I HAVE CONSIDERED THE SUBMISSION MADE. IT HAD BEEN HELD BY THE APEX COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS P. LTD. 1 98 ITR 297 (SC) THAT THE PROCEEDINGS UNDER SECTION 147 ARE FOR BENEFIT OF RE VENUE AND NOT AN ASSESSEE. IT WAS THEREFORE NOT OPEN FOR THE ASSESSEE TO MAKE ANY FRE SH CLAIM FOR ANY DEDUCTION NOT MADE AT THE TIME OF THE ORIGINAL ASSESSMENT. SAME VIEW HAS BEEN TAKEN IN THE CASES OF INDIA FORGE & DROP STAMPINGS LTD. VS. CIT 233 ITR 112 (MA D) AND CHETTINAD CORPORATION P. LTD. VS. CIT 200 ITR 320 (SC). IN THE APPELLANTS CASE, IT IS UNDISPUTED THAT THE ADDITIONAL AMOUNT OF SHOP EXPENSES AND TRAVELLING E XPENSES WERE NOT CLAIMED IN THE ORIGINAL RETURN. ALSO, THEY ARE, UNLIKE SAY-PURCHA SES, NOT ITEMS OF SUCH NATURE, THAT WITHOUT THEM IT WOULD NOT BE POSSIBLE TO MAKE THE C ORRESPONDING SALES AND HENCE THE SAME WOULD HAVE TO BE NECESSARILY CONSIDERED TO ARR IVE AT REAL INCOME FROM UNACCOUNTED SALES. THEREFORE, FOLLOWING THE RATIO SET BY HONBLE APEX COURT AND OTHER COURTS, I UPHOLD THE ACTION OF THE ASSESSING OFFICE R IN REJECTING THE ADDITIONAL CLAIMS FOR TRAVEL EXPENSES AND SHOP EXPENSES MADE IN THE COMPU TATION FILED IN RESPONSE TO THE NOTICE U/S. 148. THESE GROUNDS ARE ACCORDINGLY REJ ECTED. WE FIND THAT THE ASSESSEE HAS NEVER MADE CLAIM IN T HE ORIGINAL ASSESSMENT PROCEEDINGS OR IN THE ORIGINAL RETURN OF INCOME. THIS IS NEW CLAIM MADE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. DEFINITELY, NO NEW CLAIM CAN BE MA DE BY THE ASSESSEE IN THE PROCEEDINGS U/S. 147 OF THE ACT. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS CONFIRMED. APPEAL OF ASSESSEE IS DISMISSED. 7. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AN D THAT OF ASSESSEE ARE DISMISSED. 8. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- , . . . . , ' #!' ' #!' ' #!' ' #!' , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25TH JULY, 2014 -. #/0 #1 JD.(SR.P.S.) 5 ITA NO.1779/K/2012 & 1717/K/2012 M/S. SATYANARAYAN BASTRALAY AY 07-08 2 +##3 43&5- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT M/S. SATYANARAYAN BASTRALAYA, VILL & P. O. KOLAGHAT, DT. PURBA MEDINIPUR, WEST BENGAL, PIN 721 134 2 +,)* / RESPONDENT ITO, WARD-4, HALDIA 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 3:#; +# / DR, KOLKATA BENCHES, KOLKATA ,3 +#/ TRUE COPY,